In 2013, 120 of the 3,780 estates subject to the tax were farms and businesses, according to the Tax Policy Center. That’s a little more than 3 percent. The same year, estates valued above $20 million paid an average tax rate of 18.8 percent -- many achieve a lower effective rate through tax-planning strategies, including giving some of their fortune away to charity.
Windfall to Leaders
At that 18.8 percent effective rate, repealing the tax would be a large windfall to the leaders-in-waiting of the Trump administration.
Trump’s estate would save $564 million, based on his estimated net worth of $3 billion. Trump disagrees with that net-worth estimate, which Bloomberg News compiled in July; he has said his net worth exceeds $10 billion. If so, his savings would increase -- to as much as $1.9 billion at an 18.8 percent effective tax rate. Trump’s transition team didn’t respond to a request for comment for this story.
Trump’s Commerce secretary choice, Wilbur Ross, might save about $545 million, based on his estimated net worth of $2.9 billion. Ross is the chairman and chief strategy officer of WL Ross & Co. LLC. Richard DeVos, the father-in-law of Trump’s education secretary choice Betsy DeVos, might save $900 million, based on his estimated $4.8 billion net worth. Richard DeVos is co-founder of Alticor Inc., the parent of closely held direct-seller Amway Corp. Their net worth estimates were compiled by the Bloomberg Billionaires Index.
Repealing the tax would also benefit Treasury secretary nominee Steven Mnuchin, who held shares in CIT Group Inc. worth more than $100 million as of Dec. 2. And Linda McMahon, Trump’s pick to head the Small Business Administration, and her husband, Vince McMahon, have earned hundreds of millions of dollars after founding World Wrestling Entertainment Inc.
Early Test
The looming estate-tax debate may be an early test of how Republicans deal with the electorate’s populist-over-elite mood. In interviews, Republican senators and congressmen played down the tension between Trump’s populist image and repealing the estate tax.
“Every president who’s ever had the office is going to have tension between their campaign and reality,” said Senator Lindsey Graham, a South Carolina Republican. “How he handles that tension is up to him. But there’s nothing new about a president campaigning one way and having to govern another.”
Senate Majority Whip John Cornyn, a Texas Republican, said on Thursday he expects an estate tax repeal to be included in the budget reconciliation beginning in April. Others want it to be part of a comprehensive tax overhaul package. GOP aides said many are waiting for guidance from Trump.